MONTREAL – Astral Communications took a major financial hit in 1996, reporting a loss of C$14.6 million ($10.7 million) after garnering net earnings of C$2.1 million ($1.5 million) a year earlier.
The main reason for the plentiful red ink at the Montreal-based entertainment and technical-services company was Astral’s decision to dump its money-losing CD-manufacturing plant in Boca Raton, Fla.
The company took a one-time charge of $19 million to cover the writedown of the initial investment in AstralTech Americas, the company that runs the CD plant, and as a provision for future losses. Astral is putting AstralTech Americas up for sale.
Exiting the CD-production business is the latest in a series of moves by Astral designed to help the company focus on its core activities of broadcasting, videocassette wholesaling, technical services and content creation. Earlier this year, Astral sold its retail photo division to Black Photo Corp., and this week the deal closed for the sale of Astral’s distribution and program development divisions to Coscient Group of Montreal.
The changes at Astral reflect the strategy of president and CEO Ian Greenberg, who took over the top executive duties at the company from his brother, Harold, last year.
“I think that in the 1990s, you have to pick the businesses where you can be No. 1 or No. 2,” Greenberg said. “It was a matter of finding where we could create value.”
When Astral opened the CD plant in 1994, the company’s execs felt the move was an ideal way to stay abreast of developments in new technology, notably DVD and CD-ROM. But DVD never became a viable format, and the CD-ROM market is not generating much business, Greenberg said.
Astral also announced Wednesday that Andre Bureau has been named to the position of chairman of the board at the company, succeeding Harold Greenberg, who died in July. Bureau, who was vice chairman, will continue to hold the post of president and CEO of the Astral Broadcasting Group.
“We are definitely putting a lot of focus on our activities in the broadcast sector,” Bureau said. “There’s a potential for maximizing our existing properties, acquiring additional services in the broadcast sector and launching new services.”
Astral’s revenues from continuing operations for the fiscal year ended Aug. 31 were down slightly to $239 million, compared with $244 million in 1995. Net earnings from continuing operations were $7 million, down from $8.4 million a year earlier.